European Summary and Highlights 12 June

European morning session

A generally quiet European morning ahead of the US CPI data saw some modest gains for EUR/JPY, which gained around 20 pips to 169.10 as both EUR/USD and USD/JPY edged up around 10 pips. There was also some mild strength in the scandis, with both EUR/SEK and EUR/NOK dropping a couple of figures.

The only notable news was the UK April GDP data, which was in line with consensus at flat on the month, but still up 0.7% on a 3m/3m basis. The April data showed a 0.2% rise in services and some strength in mining and utilities making up for 1.4% m/m declines in manufacturing and construction. EUR/GBP as little changed near 0.8430.

Asia session

While all eyes remain on BoJ's interest rate decision later this week, we have stronger than expected PPI, which would be supportive for the BoJ's interest rate decision to hike. The Japan May PPI came in at +0.7% m/m, beating estimate and rose from 0.3% in April and +2.4% y/y with expectation of +2.0%. Despite the fact PPI's translation into CPI has been gradual and limited, it would add fuel to the wage driven inflation in the coming months. U.S. Treasury Yields are performing individually and 10yr JGB yields had dipped below 1%. USD/JPY is trading 0.03% higher at 157.18.

The headline Chinese CPI for May has come in lower than estimate at 0.3% y/y and contracted by 0.1% m/m. But market participants seems to be focused on the improving PPI, which rose from -2.5% to -1.4% y/y, a government led improvement.  Regional sentiment is still soft while U.S. three major equity indexes are in the green. AUD/USD is trading 0.16% higher at 0.6616, NZD/USD is barely 0.02% higher at 0.6145 while USD/CAD slipped 0.06% to 1.3749 with oil up twenty cents. Else, EUR/USD is up 0.01% and GBP/USD is up 0.04%.